Standardized Contract Terms and Wartime Sales

I read with interest Marie Reilly’s post on Vindication for the Contract of Adhesion, as I’ve been thinking about the issues related to standardized terms in my work on wartime contracts. Through the Federal Acquisition Regulations and the Defense Federal Acquisition Regulation Supplement (DFARS), the federal government has made government contracting a field dominated by standard contract clauses. For instance, the DFARS mandate inclusion of a contract clause whereby contractors accept much of the risk associated with contract performance in a warzone. Applying Judge Easterbrook's analysis in IFC Credit Corp. v. United Business & Industrial Federal Credit Union, it would seem that onerous terms mandated by the government buyer for wartime contracts will lead to higher prices imposed by the wartime sellers in return. No wonder the war in Iraq is costing the taxpayers so much.

Joes S.’ comment observed that “[j]udicial intervention into contracts does no good” in specific types of cases. With respect to wartime sales, perhaps some judicial intervention will ultimately do some good. Using Joe S.’ categories, I would argue that perhaps none of them absolutely satisfied for wartime sales in Iraq. Moreover, determining what particular risks are actually assumed by sellers under the government's standardized terms is not without debate. Lack of clear understanding of the obligations allocated to each party under the DFARS paves the way for needed judicial resolution at some later date. Wartime sales have presented unique challenges to contracting parties that test the ability of the government’s default rules to manage a wide array of sales under changing circumstances. As such, I agree that concepts of “fairness” survive, particularly when both parties may have “fail[ed] to consider the full consequences of [their] legal decisions.” Original Great American Chocolate Chip Cookie Co. v. River Valley Cookies, Ltd., (Posner, J. 1992).